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Big banks update RBA forecasts – how high will interest rates now go?

Laine Gordon avatar
Laine Gordon
- 4 min read
Big banks update RBA forecasts – how high will interest rates now go?

Economists from all four big banks now believe the cash rate will start rising from May, with Westpac and NAB the last of the major banks to bring forward their forecasts.

Westpac today has updated its forecast on the back of the RBA’s monetary policy statement.

Westpac’s economic team is now predicting the cash rate hikes will start in June and hit 2 per cent by June the following year. The bank’s previous forecast had the rate hikes starting in August and reaching 1.75 per cent in February 2024.

NAB has also updated its forecast, with the first cash rate hike starting in June (previously August), while on Tuesday, ANZ’s economic team updated its cash rate forecast, bringing forward the predicted start date by three months to June.

All four big bank economic forecasts have the cash rate hikes finishing at different points. CBA believes the neutral cash rate will be 1.25 per cent, whereas ANZ has said the cash rate will rise above 3 per cent but not until after 2023.

Big four bank forecasts: how high will the cash rate go and when?

  • CBA: hikes to start in June. Cash rate to reach 1.25% by February 2023.
  • Westpac: hikes to start in June. Cash rate to reach 2.00% by June 2023.
  • NAB: hikes to start in June. Cash rate to reach 2.25% by August 2024.
  • ANZ: hikes to start in June. Cash rate to reach 2.00% by November 2023 and peak above 3.00%, but not until sometime after 2023.

How much extra could mortgage holders be paying if Westpac’s forecasts are realised?

If the cash rate reaches 2 per cent by June 2023, as predicted by Westpac, the average owner-occupier with a $500,000 debt and 25 years remaining, could see their repayments rise by $509. This would equate to a 22 per cent rise in monthly repayments from today to mid next year.

Westpac forecasted RBA hikes: impact on $500K home loan





Monthly repayments




Source: Notes: forecasts are from Westpac’s economic team. Calculations are based on an owner-occupier paying principal and interest with an outstanding debt of $500K over 25 years on the RBA's average existing customer variable rate of 2.92%. research director, Sally Tindall, said Westpac, NAB and ANZ had all brought forward their rate hike schedule on the back of Tuesday’s RBA statement.

“The notable exclusion of Governor Lowe’s “prepared to be patient” mantra has raised alarm bells among economists,” she said.

“Governor Lowe effectively ruled out a hike in May by stipulating he wanted to see further wages data, the next round of which is out mid-May. However, June is a live possibility.

“If Westpac’s forecasts are realised, by June next year the average borrower with a $500,000 loan could see their repayments rise by $509. To put that into context, that’s like having your car registration come up for renewal every single month.

“While there’s plenty of conjecture about how high the cash rate will go, if Westpac is on the money, it could equate to a 22 per cent hike in mortgage repayments in just over a year. That’s a steep rise, particularly for people with large loans compared to their income.

“People who think they might struggle to make higher repayments shouldn’t wait until June to see whether the RBA makes its move. Now is the time to start battening down the hatches and building up a buffer,” she said.

What can mortgage holders do now before rates rise?

  • Get yourself a rate cut now before the RBA hikes start: Call your bank and haggle. The average variable rate mortgage holder is paying 0.40% more than a new customer. If your bank doesn’t budge, you could be better off refinancing.
  • Make extra repayments: Paying down as much of your debt now, while your rate is still low, will help soften the blow when rates rise.
  • Prepare your budget: See where you can trim your budget to free up money to help build a buffer.
  • On a fixed rate? Set a reminder for two months before it ends so you can begin shopping around for a new loan. Fixed loans often roll over to higher variable rates unless you do something about it.

Lowest variable rates on

LenderLowest advertised variable rate
Homestar Finance


Pacific Mortgage Group


Reduce Home Loans


Well Home Loans


Freedom Lend


Source: Note: rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.


This article is over two years old, last updated on April 7, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.